Archive for June, 2010

In the book Bazaar and State in Iran, Arang Keshavarzian gives us a closer look at the largest bonyad in Iran, the Bonyad-e Mostazafan, or the Foundation for the Oppressed and Disabled (often called the Foundation of the Oppressed and Disabled Veterans after the Iran-Iraq War).

Keshavarzian writes:

The Foundation of the Oppressed and Disabled, the principal holder of assets seized from the royal family, is the largest of these [bonyad] foundations and is sometimes referred to as the “government within the government.” In 1982, the foundation owned 203 manufacturing and industrial factories, 472 large farms, 101 construction firms, and 238 trade and service companies. In the past two decades it has used these already large assets to expand its activities into all areas of the economy, including manufacturing, commerce, banking, tourism, and telecommunications.

It is difficult to estimate their total assets because the foundations’ accounts are not public, but whatever the exact extent of these parastatal organs’ asset base, analysts agree that the scant supervision has encouraged inefficiencies, mismanagement, and embezzlement. For instance, in 1995, a court found several key figures of the Foundation of the Oppressed and Disabled guilty of embezzlement, although the head of the foundation escaped conviction.

Over time the foundations’ economic prominence and prosperity have continued, if not expanded. They have been able to circumvent the official trade system, while their political ties have given them access to subsidized foreign currency without performance criteria. Therefore, the foundations can import, export, and sell goods below market prices and the production costs of local producers… Moreover, independent capitalists cannot compete with the state-affiliated establishments that are exempted from duties and time-consuming bureaucratic hurdles…”

According to IranWatch, Bonyad-e Mostazafan is “listed by the German government as a risky end-user in warnings supplied to its exporters; identified by the British government in February 1998 as having procured goods and/or technology for weapons of mass destruction program.”

Law professor Russell Powell recently wrote, “The largest bonyad, Bonyad-e Mostazafin, supports the family members of martyrs and has $12 billion in assets and employs 400,000.”

Suicide bombing pay-outs, palm-greasing, commercial rackets… remind me again which department at Bonyad-e Mostafazan serves the poor, the oppressed, and the disabled?

Treasury Under Secretary Stuart Levey made a series of positive statements about the U.N.’s latest sanctions against Iran in testimony before Congress earlier this month including these direct quotes:

“The adoption of Resolution 1929 marks an inflection point in this strategy, as it broadens and deepens existing sanctions programs on Iran and creates an opportunity for us to further sharpen Iran’s choices.”

“Resolution 1929 enhances the international community’s obligation to impose measures on Iran’s financial sector, businesses owned or controlled by the Islamic Revolutionary Guard Corps (IRGC), and on elements of Iran’s transportation sector that have been used to evade sanctions.”

“The adoption of UNSCR 1929 has enhanced a global effort to hold Iran accountable for its actions.”

But it wasn’t all open-ended praise. Levey also characterized Resolution 1929 as a measure that the U.S. will have to reinforce through ongoing pressure of its own.

Levey and his team at Treasury are hard workers and straight shooters most of the time. They believe what they’re saying. Since sanctions are a large part of what these Treasury folks do for a living, they want to believe that sanctions truly matter. Would you like to wake up in the morning believing that whatever you do at work that day would be pointless?

Of course not. But even Levey himself acknowledges the limitations of sanctions by saying, “If the Iranian Government holds true to form, it will scramble to identify “work-arounds” – hiding behind front companies, doctoring wire transfers, falsifying shipping documents” in order to avoid sanctions.”

This gradual escalation of sanctions may help, but we must acknowledge that Iran will not sit by passively and let itself get taken to the cleaners by the U.N. and Stuart Levey.

When the United Nations Security Council passed its latest economic sanctions against Iran (Resolution 1929), the U.S. State Department confessed that the resolution did not preclude Russia from selling S-300 missiles to Tehran.

Sen. Jon Kyl and national security analysts quickly condemned the glaring loophole. However, Russia followed up by issuing statements of its own that the missile sales to Iran would be “frozen.”

A “freeze” means that the Russians could thaw it at any time as a future bargaining chip against the West. The moment we try to do something that Putin doesn’t like, he can say, “I must look again at Resolution 1929, Comrade Wolf.”

Ahmadinejad has made a big show of his anger at Russia for voting for sanctions, but that’s mostly for public consumption. Iran will continue to use its oil wealth, its extensive sharia banking network, and its bonyad system to circumvent the latest sanctions regime and get back in bed with Putin.

During a 2006 hearing in Congress on energy and the Iranian economy, Dr. Kenneth Katzman, a specialist on the Middle East, summed up a major problem with the bonyads, the Iranian charitable foundations we described in the last post:

The most controversial allegation about the bonyads has been whether or not their funds have been used to procure weapons of mass destruction (WMD) technology. This allegation has long surrounded the largest bonyad, the Foundation for the Oppressed and Disabled, primarily because this bonyad has been run by hardliners and former officials of the Revolutionary Guard (example, Mohsen Rafiq-Dust, a former Minister of the Revolutionary Guard). The theory underlying the allegation is that the bonyads, because they are not formally part of Iran’s government, can operate outside official scrutiny of foreign governments, and could therefore illicitly procure equipment that might not be approved for export to Iran. During an official visit to Dubai in 1995, observers at the US consulate there told me that Foundation employees were present in significant numbers in Dubai, holding large quantities of cash which they were using to procure technology from Russia and other arms and technology brokers in the emirate…

Did somebody mention Iranian “technology” procurement from Russia? More on that tomorrow.

Saudi Arabia is reviewing its terrorism strategy after the detection of a female-run network that was fund raising for al-Qaida.

Heila al-Qusayyer, the middle-class mother described as al-Qaida’s “first lady”, was running a cell of 60 alleged militants. She is believed to have been the Arabian peninsula’s main fund-raiser for al-Qaida.

Qusayyer holds a degree in geography and was married to a former executive from Aramco, the state oil company, who gave up his material possessions to become a radical preacher.

Counter terrorism officials previously assumed that young men and boys were the principal agents of radical Islam. Saudi security chiefs have since set up a specialist all-female unit at King Saud University, the country’s oldest, to study the appeal of Islamist militancy to women and how best to tackle it.

“The story of this woman, who was involved in collecting money – with that money finding its way to al-Qaida – has been like an alarm call to us,” said General Mansur al-Turki of the interior ministry.

Female terrorists have been arrested in the past, including some involved in bomb preparation, but such is the sensitivity towards the role of women that they were released.

The country’s approach to suspects has become tougher across the board after Saeed al-Shehri emerged as deputy leader of al-Qaida in the Arabian Peninsula.

Before then the country, Osama bin Laden’s birthplace, put alleged terrorists through a controversial rehabilitation program with an emphasis on education and psychology.

Shehri, a former Guantanamo Bay inmate who returned to Saudi Arabia and then fled to Yemen, specifically demanded the release of Qusayyer, who was arrested in February.

Based on confessions she is said to have made in custody, the authorities claim she used the cover of Islamic charities to obtain donations of cash and jewellery which she passed on to al-Qaida. One payment was for 650,000 Saudi riyals ($187,000 Cdn).

Bonyads are controversial charitable trusts in Iran that dominate Iran’s non-petroleum economy, controlling an estimated 20% of Iran’s GDP. Exempt from taxes and government control, they have been called “bloated”, and “a major weakness of Iran’s economy”, and criticized for reaping “huge subsidies from government”, while siphoning off production to the lucrative black market and providing limited and inadequate charity to the poor.

Founded as royal foundations by Shah Mohammad Reza Pahlavi, the original bonyads were criticized for providing a “smokescreen of charity” to patronage, economic control, for-profit wheeling and dealing done with the goal of “keep[ing] the Shah in Power.” Resembling more a secretive conglomerate than a charitable trust, these bonyads invested heavily in property development – such as the Kish Island resort – but the developments’ housing and retail was oriented to the middle and upper classes, rather than the poor and needy.

After the 1979 Iranian revolution, the Bonyads were nationalized and renamed with the declared intention of redistributing income to the poor and families of martyrs, i.e. those killed in the service of the country. The assets of many Iranians whose ideas or social positions ran contrary to the new Islamic government were also confiscated and given to the Bonyads without any consequence.

Today, there are over 100 Bonyads, and they are criticized for many of the same reasons as their predecessors. They form tax-exempt, government subsidized, consortiums receiving religious donations and answerable directly (and only) to the Supreme Leader of Iran. (Internal citations omitted)

Putting it more succinctly, Middle East expert Ray Takeyh describes bonyads as “massive semi-government foundations with vast religious and philanthropic missions [which] have metamorphosed into huge holding companies that dominate the trade and manufacturing sectors while evading competition, taxes and state regulations.”

According to Warner Todd Huston in ChicagoNow’s Publius Forum on June 18:

While Mayor Richard “King” Daley goes about his important work of destroying Chicagoan’s 2nd Amendment Rights, a terror supporting Islamist organization is again coming to the Windy City to spread its message of jihad and raise money for the cause.

Hizb ut-Tahrir America, a group committed to a world-wide caliphate by which to oppress the world and destroy freedom and liberty, is bringing its newest outrage to Chicago for the second year in a row. The terror supporting group’s second conference, titled “Emerging World Order: How the Khilafah Will Shape the World,” is scheduled to be held on July 11 at the Chicago Marriott Oak Brook.

While Daley might be happy that terror supporters are setting up shop in the city he is attempting to disarm, not everyone thinks this jihadi conference is a good idea.

“The bottom line here,” he said, “is that we are witnessing the emergence and the expansion of a jihadist recruitment factory in our midst, openly calling for jihad and for the establishment of a caliphate instead of many governments… and in its last stage to what they call jihadism against America and its allies, that is, technically speaking, terrorism and massacre.”

For those that might have forgotten, Hizb ut-Tahrir’s 2009 conference was titled, “Fall of Capitalism & Rise of Islam…”